EDA and Semiconductor Solutions - Synopsys is a global leader in EDA software, providing solutions for designing and testing integrated circuits (ICs) and pioneering AI-driven chip design across the full-stack EDA suite[16] - The company offers a comprehensive portfolio of semiconductor IP solutions, including logic libraries, embedded memories, analog IP, and security IP, to reduce integration risk and speed time to market[17] - Synopsys launched a cloud-based EDA offering in fiscal 2022, providing customers with additional options for accessing EDA products in their own cloud environments and partnering with Microsoft Azure for the industry's first EDA Software-as-a-Service solution[29] - The company's AI-driven EDA solutions, part of the Synopsys.ai suite, include DSO.ai, VSO.ai, TSO.ai, and ASO.ai, aimed at optimizing design, verification, test, and analog workflows[40] - Synopsys supports advanced technology nodes, including 12nm, 10nm, 8/7nm, 6nm, 5/4nm, 3nm, and 2nm, with collaborations on next-generation process technologies[32] - The company's Design IP segment includes high-quality solutions for interfaces like UCIe, USB, PCI Express, and DDR, as well as processor solutions and security IP[45] - Synopsys' Verification Family includes VC SpyGlass, VCS, and Verdi, providing static and formal verification, simulation, and emulation to accelerate chip verification[36] - The company's manufacturing solutions feature Synopsys TCAD, Proteus Mask Synthesis, and Yield Explorer, leveraging AI/ML and large data sets for smart manufacturing[39] - Synopsys' IP Accelerated initiative offers architecture design expertise, IP hardening, and signal/power integrity analysis to accelerate the product development cycle[45] - Synopsys offers a broad portfolio of IP optimized for mobile, automotive, digital home, IoT, and AI/data center markets, enabling rapid SoC development[46] Revenue and Financial Performance - The company's revenue from one customer and its subsidiaries accounted for 12.6%, 13.5%, and 12.8% of total revenue in fiscal 2024, 2023, and 2022, respectively[60] - The company's revenue is categorized into three groups: EDA (digital and custom IC design software), Design IP (interface and embedded processor IP), and Other (university programs, optical products, etc.)[58] - The company's financial results are subject to fluctuations due to changes in demand, product competition, and the timing of revenue recognition[124][127] - Potential negative impact on net income and earnings per share due to acquisition or investment-related costs[131] - Substantial reductions in cash resources and potential incurrence of debt at higher than anticipated interest rates[132] - The Ansys Merger is expected to increase the company's debt and liquidity needs, with 24% of cash held internationally as of October 31, 2024[173] - Post-Ansys Merger, the company's significant debt could limit financial flexibility and increase vulnerability to economic changes[191] - The company's ability to service debt post-Ansys Merger depends on financial performance and market conditions, with potential risks of asset sales, debt restructuring, or equity capital raising if cash flow is insufficient[192] - A decrease in credit ratings could negatively impact the company's access to debt capital markets and increase borrowing costs[193] - Changes in tax laws or interpretations could materially impact the company's effective tax rate and financial position, with deferred tax assets dependent on future taxable income[199] Workforce and Employee Engagement - Synopsys had approximately 20,000 employees as of fiscal 2024 year-end, with 20% in the U.S. and 80% globally, and 87% of employees are engineers[75] - The voluntary turnover rate was 6.4% in fiscal 2024, attributed to factors such as growth opportunities, competitive compensation, and strong leadership[76] - The company's employee engagement score was 80 in October 2024, with 91% participation in the SHAPE survey[84] - The company introduced new management training courses in fiscal 2024, focusing on helping managers lead through change and develop coaching and leadership skills[88] - Difficulty in recruiting and retaining senior management and key employees globally[150][152] Risks and Challenges - The company faces risks from macroeconomic uncertainties, including global inflationary pressures, supply chain disruptions, and geopolitical tensions, which could impact customer spending and revenue recognition[97] - The company is exposed to risks from increased competition in the EDA industry, which could lead to declining revenue growth rates and operating margins[101] - The company's business model is vulnerable to fluctuations in demand for devices like personal computers, smartphones, and automobiles, which could reduce demand for its design solutions[98] - The company is subject to risks related to the Ansys Merger, including potential failure to realize expected benefits, increased competition, and financial constraints due to significant debt[92] - The company's reliance on third-party IP and foundry processes is critical, and failure to optimize its EDA and IP solutions for these processes could harm its business[102] - The company faces cybersecurity threats and potential breaches that could compromise sensitive information and harm its reputation[91] - The company's global operations expose it to compliance risks and regulatory challenges, which could impact its ability to compete internationally[90] - The company's liquidity requirements in the U.S. may necessitate raising cash in uncertain capital markets, potentially affecting its financial condition[91] - The company faces intense competition in the Design Automation and Design IP segments, with competitors like Cadence Design Systems and Siemens EDA, as well as customers developing internal tools[104] - China's national policies and government-backed investment funds are fostering domestic EDA capabilities, increasing competition in the semiconductor industry[105] - The company is developing cloud computing and AI solutions, but there is no guarantee of success in these new technology initiatives[107] - Export and import regulations, including U.S. Export Administration Regulations, could restrict the company's ability to sell products internationally and subject it to penalties[110][111][112] - The company derives roughly half of its revenue from international sales, exposing it to risks such as economic slowdowns, political instability, and currency fluctuations[118][123] - Consolidation among customers in the semiconductor industry could lead to reduced demand for the company's products and services[115][116] - Cybersecurity threats and breaches could compromise sensitive information and harm the company's reputation[136][138] - Increasing reliance on third-party software solutions and cloud-based services, which increase potential threat vectors[139] - Challenges in protecting proprietary technology and potential legal costs related to intellectual property litigation[142][145] - Risks associated with AI initiatives, including failure to meet customer demands or competitive pressures[147][148] - Potential adverse effects from evolving laws and regulations affecting AI-related products[149] - Significant investments in research and development may not result in successful new products or revenue growth[160] - Product errors or defects could harm the company's reputation and lead to market share loss, especially in new or integrated software products[161] - Hardware product sales growth introduces risks such as dependence on a sole supplier, variable revenue, and potential margin reductions[165] - The company faces potential intellectual property infringement claims, which could result in costly litigation and product redesigns[167] - The company relies on third-party software licenses, and failure to renew or obtain new licenses could disrupt business operations[169] - If the Ansys Merger is not completed, the company could face risks including a $1.5 billion termination fee and negative publicity[176] - The Ansys Merger may result in increased competition and integration challenges, potentially impacting revenue and margins[185] - Post-Ansys Merger debt agreements may restrict the company's ability to engage in mergers, acquisitions, and incurring debt at subsidiaries, with financial covenants requiring maintenance of certain ratios[197] - The company is subject to evolving ESG reporting standards, which may be costly and difficult to implement, with potential risks to business and financial performance if goals are not met[203] - Legal claims or regulatory matters could harm the company's business, with potential for unfavorable rulings leading to monetary damages or injunctions[204] - Catastrophic events, climate change, or pandemics could disrupt the company's global operations, particularly affecting data centers and critical business systems located in California[206] Intellectual Property and Innovation - Synopsys holds a diversified portfolio of over 3,400 U.S. and foreign patents, with expiration dates through 2044[68] - The company's growth strategy includes acquisitions, such as the anticipated Ansys Merger in 2025, but there is no guarantee of finding suitable targets or completing transactions[130] - Difficulties in integrating acquired products and retaining key employees[131][132] - The Ansys Merger is anticipated to be completed in the first half of 2025, subject to governmental approvals and closing conditions[175] ESG and Sustainability - The company's ESG strategy focuses on energy savings in semiconductor design and manufacturing, reducing energy use, water use, and waste[71] - The company maintains a cybersecurity program to protect against, detect, and respond to cybersecurity incidents, with no material incidents reported since 2015[214] Customer Support and Services - The company provides post-contract customer support through the SolvNet Plus portal, offering technical documentation, design tips, and access to a design knowledge database[48] - The company's hardware products, including emulation and prototyping systems, are sold or leased to customers, with supply chain risks outlined in the Annual Report[64] Global Operations and Market Exposure - The company has 116 offices worldwide, with headquarters located in Sunnyvale, California[18] - The company competes on technology, product quality, features, license terms, customer support, interoperability, and pricing[108] - The company derives roughly half of its revenue from international sales, exposing it to risks such as economic slowdowns, political instability, and currency fluctuations[118][123]

Joint Solution to Speed SoC Development for Next-generation ADAS and IVI Applications SUNNYVALE, Calif. and SAN JOSE, Calif., Dec. 17, 2024 /PRNewswire/ -- Synopsys (Nasdaq: SNPS) and SiMa.ai today announced a strategic collaboration to jointly deliver a new solution for automotive companies to accelerate the development of workload-specific silicon and software needed to power artificial intelligence-enabled features in next-generation automobiles. The solution will combine Synopsys' best-in-class EDA, au ...

Core Viewpoint - Synopsys (SNPS) shares have declined 12.7% over the past six months, underperforming the Zacks Computer-Software industry and broader market indices, but maintaining a hold position is recommended due to the company's strong foundation and strategic positioning in high-growth markets [1][15]. Market Performance - Synopsys' stock performance has lagged behind the Zacks Computer and Technology sector, which returned 8.6%, and the S&P 500's return of 12.4% during the same period [1]. Key Market Recovery - The sluggish recovery in key markets such as mobile, PC, and automotive has contributed to Synopsys' underperformance, with consumer demand remaining muted amid economic uncertainties [4]. - The Design Automation segment reported a 12% year-over-year revenue increase, driven by demand for EDA software and hardware, although this was partially offset by weaker demand in consumer electronics [5]. - The automotive market saw a 24% revenue growth in the Design IP segment, but remains vulnerable to macroeconomic slowdowns and regulatory changes [5]. Risks from China and Competition - Synopsys faces risks due to its significant exposure to China, where regulatory challenges and trade tensions with the U.S. could impact growth [6]. - Increased competition from EDA vendors like Cadence Design Systems and Mentor Graphics poses a threat, particularly as Synopsys relies on high-margin Design IP and faces pricing pressures [7]. Valuation Concerns - Synopsys trades at a forward 12-month price-to-sales (P/S) multiple of 11.32x, above the industry average of 8.26x, indicating potential limited near-term upside in a volatile market [8]. Strategic Partnerships - The company benefits from strong strategic partnerships with industry leaders such as TSMC, NVIDIA, Intel, and Arm Holdings, which enhance its position in chip design innovation [9]. - Collaborations with TSMC and NVIDIA are crucial for driving efficiencies and reducing time-to-market for complex semiconductor designs [10]. Technological Leadership and Acquisitions - Synopsys is expanding its technological leadership through investments in AI-powered design automation tools and strategic acquisitions, such as Ansys' simulation solutions, expected to close in early fiscal 2025 [11][12]. - These initiatives position the company to capitalize on the growing complexity of chip development and capture new growth opportunities [13]. Sales and Earnings Estimates - Zacks Consensus Estimates for fiscal 2025 and 2026 indicate continued growth in revenues and earnings, with projected revenues of $6.77 billion for the current year and $7.60 billion for the next year [14]. - Year-over-year growth estimates show a decline of 11.90% for the current quarter, but a recovery of 9.78% for the next quarter, and 12.33% for the following year [14]. Conclusion - Despite recent stock declines and macroeconomic uncertainties, Synopsys' strong fundamentals and technological innovation suggest potential for long-term success, making a hold position advisable for existing investors [15][16].

Core Message - Synopsys introduces the industry's first Ultra Ethernet and UALink IP solutions to address the growing demand for high-bandwidth, low-latency interconnects in AI and HPC infrastructure [1][2] - These solutions aim to scale AI accelerator clusters, supporting up to one million endpoints and 1,024 accelerators, respectively [1][2][4] Ultra Ethernet IP Solution - Offers up to 1.6 Tbps bandwidth with ultra-low latency, enabling real-time AI workload processing [1][2] - Supports scaling out backend networks to one million endpoints with a low-risk path for designers [2] - Includes a silicon-proven 224G Ethernet PHY IP with broad interoperability demonstrated at major tradeshows [2] - Provides seamless integration for switches, AI accelerators, and smart NICs [2] - Accelerates verification and validation to ensure protocol adherence to rapidly evolving standards [2] UALink IP Solution - Enables scaling up computing fabrics to support up to 1,024 AI accelerators [1][4] - Delivers 200 Gbps per lane for efficient, high-speed data transfers optimized for AI workloads [4] - Mitigates AI hardware bottlenecks with latency-optimized controller IP and shared memory access [4] - Combines verification IP with hardware-assisted solutions for quick and reliable AI hardware validation [4] Industry Collaboration - Synopsys collaborates with industry leaders including AMD, Astera Labs, Juniper Networks, Tenstorrent, and XConn to scale the HPC and AI accelerator ecosystem [1][5] - Juniper leverages Synopsys Ethernet IP in its 800GbE-capable PTX10002-36QDD Packet Transport Router, aiming to transition to 1.6TbE [3] - AMD highlights the importance of Synopsys' IP alongside its high-performance processors for creating a robust AI ecosystem [5] - Astera Labs emphasizes the role of UALink in supporting the rapid growth and complexity of AI and HPC workloads [5] - Tenstorrent plans to use Synopsys' UALink and Ultra Ethernet IP to enable large AI accelerator clusters [5] - XConn's UALink switches combined with Synopsys' IP aim to address hyperscalers' connectivity challenges [5] Availability - Synopsys Ultra Ethernet IP solution, including MAC, PCS, PHY, and verification IP, is scheduled for release in the first half of 2025 [6] - Synopsys UALink IP solution, including controller, PHY, and verification IP, is scheduled for release in the second half of 2025 [6] Company Background - Synopsys delivers comprehensive silicon-to-systems design solutions, including EDA, silicon IP, and system verification and validation [7] - The company partners with semiconductor and systems customers across industries to maximize R&D capability and productivity [7]

Key TakeawaysThe S&P 500 declined 0.2% on Thursday, Dec. 5, as the record-setting stock rally cooled ahead of Friday morning's jobs report.Synopsys shares tumbled as U.S. restrictions on chipmaking exports to China weighed on the electronic design firm's 2025 outlook.Alcoholic beverage maker Brown-Forman topped quarterly estimates on strong whiskey demand, and its shares surged. Major U.S. equities indexes hovered near record levels in Thursday trading before closing lower ahead of Friday morning's employme ...

Core Viewpoint - Synopsys, Inc. (NASDAQ: SNPS) has shown growth in the Electronic Design Automation (EDA) sector, but its stock valuation remains high, leading to significant underperformance compared to the S&P 500 Index since the previous "Sell" report in January 2024 [1] Company Summary - Synopsys, Inc. is experiencing growth in the EDA market, which is a positive indicator for its operational performance [1] - The stock price of Synopsys has notably underperformed relative to the S&P 500 Index, suggesting potential concerns regarding its valuation [1]

Key TakeawaysSynopsys stock has fallen more than any other S&P 500 component Thursday after the company reported fiscal fourth-quarter results.The chip design software maker's fiscal 2025 outlook was below the analyst consensus compiled by Visible Alpha.The company's shares are now about flat for the year. Synopsys (SNPS) shares tumbled after the chip design software maker posted a disappointing forecast for its coming fiscal year late Wednesday.  The company called for full-year revenue of $6.75 billion t ...

Financial Data and Key Metrics - Revenue for FY 2024 grew 15% year-over-year, reaching $6.13 billion, marking a significant milestone as the company crossed the $6 billion mark just three years after reaching $4 billion [7][36] - Non-GAAP EPS grew at a 24% CAGR over the last five years, with FY 2024 non-GAAP EPS reaching $13.20, up 25% year-over-year [7][36] - Non-GAAP operating margin for FY 2024 was 38.5%, with Design Automation and Design IP segments achieving adjusted operating margins of 38.7% and 38.3%, respectively [36][37] - Operating cash flow for the year was $1.4 billion, and free cash flow was $1.28 billion, with the company ending the year with $4.05 billion in cash and short-term investments [38] Business Segment Performance - **Design Automation**: Revenue for Q4 grew 17% year-over-year, with full-year revenue up 12% to $4.22 billion, driven by strength in EDA software and hardware [14][37] - **Design IP**: Revenue for the full year grew 24% to $1.91 billion, with robust design activity in high-performance computing and automotive sectors [25][37] - **Hardware Business**: Record year for hardware, with strong momentum in HAPS and ZeBu product lines, including over 50 repeat HAPS customers and 10 new customers in Q4 [24] Market and Geographic Performance - The company experienced double-digit growth across all products and geographies, with particular strength in AI-driven markets and high-performance computing [36] - China's growth decelerated due to economic slowdowns and expanding restrictions, with revenue expected to align with the corporate average in FY 2025 [130][156] Strategic Direction and Industry Competition - The company is focusing on its "silicon to systems" strategy, with the pending acquisition of Ansys expected to enhance its capabilities in AI-powered design solutions [8][11] - AI-driven innovation is a key growth driver, with Synopsys.ai solutions delivering significant customer results, including optimizing over 700 tape-outs and improving hardware utilization by up to 4 times [15][16] - The company is also advancing in Multi-Die designs, partnering with TSMC to improve predictability and yield, with 90% of HPC AI designs expected to be Multi-Die by 2027 [20][21] Management Commentary on Operating Environment and Future Outlook - Management expects double-digit revenue growth and a 40% operating margin in FY 2025, despite macro uncertainties and the impact of the Ansys acquisition [13][35] - The company is preparing for the largest acquisition in its history, with the Ansys deal expected to close in the first half of 2025 [12][50] - AI is seen as a transformative force, evolving from a discrete capability to an essential part of the company's operations and customer workflows [18][19] Other Important Information - The company changed its fiscal year to end on October 31st, resulting in 10 fewer days in the first half of FY 2025, impacting revenue by approximately $100 million [34][39] - The backlog at the end of FY 2024 was $8.1 billion, reflecting strong visibility into future revenue [33][54] Q&A Session Summary Question: Underlying growth assumptions for FY 2025 - The company provided a balanced view for FY 2025, considering market dynamics, macro uncertainties, and the Ansys acquisition, guiding for 11.5% to 12.5% growth [45][50] Question: Impact of U.S. semiconductor export restrictions - The latest U.S. export restrictions on EDA software are incorporated into the FY 2025 guidance, with some customers added to the entity list [66][68] Question: Growth profile of Design Automation and IP businesses - The company expects strong growth in Design Automation and IP, driven by increased investment in AI infrastructure and Multi-Die designs [71][73] Question: Design starts and customer-specific AI use cases - Design starts, particularly in AI, have been accelerating, with hyperscalers and semiconductor companies increasing their investments in custom silicon [77][79] - The company is exploring customer-specific AI use cases, leveraging generative AI and domain-specific design to enhance workflows [105][111] Question: China's impact on FY 2025 outlook - China's growth is expected to align with the corporate average, with deceleration due to economic slowdowns and expanding restrictions [129][156] Question: Operating margin improvement and pricing strategy - The company is focused on driving operating margin improvement through efficiency gains and modernization, with a 150 basis point improvement expected in FY 2025 [89][159]

SYNOPSYS® Corporate Overview for Investors December 2024 Forward-Looking Statements This presentation contains forward-looking statements, including, but not limited to, statements regarding Synopsys, Inc.'s (Synopsys, we or our) statements regarding short-term and long-term financial targets, expectations and objectives including, among others, our long-term financial objectives, which include the anticipated effects of our pending acquisition of ANSYS, Inc. (the Ansys Merger); business and market outlook, ...

For the quarter ended October 2024, Synopsys (SNPS) reported revenue of $1.64 billion, up 2.3% over the same period last year. EPS came in at $3.40, compared to $3.17 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $1.63 billion, representing a surprise of +0.23%. The company delivered an EPS surprise of +3.34%, with the consensus EPS estimate being $3.29.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expe ...